Guiding principles

Landsvirkjun sets out key objectives in six areas regarding social responsibility every year. The objectives for 2017 can be seen below as well as action and outcomes.

Section

Segment

Objectives 2017

Every year, we develop an annual action plan defining one or more targets for each main category for that particular year. This enables the Company to increase any positive impact on the environment and minimise the negative. The objectives are introduced on the Company website at the beginning of each year and their progress is monitored. They are assessed and re-evaluated as the next New Year begins when new objectives are set.

Some of the objectives and the projects associated with them are supported by policies or regulations that Landsvirkjun has deemed necessary. This offers stakeholders more transparency with regard to our operations and gives them the opportunity to communicate their expectations. These measures also ensure a common understanding of certain topics at a cross-divisional level.

The increased demand for non-financial disclosure, which specifically encourages a discussion on policy with regard to human rights, is outlined in in the new Act on Annual Accounts. Landsvirkjun will either review its equality policy in 2017, using human rights issues as a basis, or it will develop a policy on human rights.

Status at year-end 2017Preparatory work for Landsvirkjun's policy on human rights was carried out in 2017 but has not been completed. The human rights policy is due to be published in 2018.

Green steps are about systematically promoting ecological operations. The activities are primarily focused on ordinary office activities and have a positive impact on the environment, improving the working environment of employees and reducing operating costs.

Status at year-end 2017We completed Green Steps two and three in Akureyri and Reykjavik this year. The procedure for step four was also adopted, but has yet to be assessed by the Environment Agency. Green step procedures have been part of the environmental audit system in all Landsvirkjun's operational areas since 2017.

Mapping the value chain

The Code of Conduct provided for suppliers and service providers are a requirement and a part of the Company's daily operations. Efforts will be made to create an improved overview of the social impact of suppliers. These include climate action and fossil fuel consumption.

Status at year-end 2017 Proposals were introduced, in cooperation with a number of consultants, as to appropriate requirements for contracts with contractors, with regard to reducing fossil fuel consumption during the construction period. One of the Company's policies is to minimise the use of fossil fuels in its operations and to assist others in doing the same. Potential measures to minimise the use of fossil fuels on-site (with a particular emphasis on heavy equipment) were assessed.

Landsvirkjun signed the “Caring for Climate” declaration at the Paris Summit in December, 2015. The declaration commits Landsvirkjun to publishing the results of its success in the fight against climate change. Landsvirkjun submitted its first report to the Carbon Disclosure Project (CDP), in accordance with the requirements of membership outlined for the Carbon Disclosure Project (CDP) in 2016.

Status at year-end 2017Landsvirkjun submitted a report on its carbon emissions and action on climate action to the CDP for the second time in 2017.

According to the CDP's feedback, Landsvirkjun has made a good start on its work on climate change awareness. The CDP mentioned the following actions to strengthen work and improve Landsvirkjun's performance with regard to action on climate change:

Use the SBTI (Science Based Targets initiative) guidelines when setting carbon emission objectives

Landsvirkjun will use the CDP feedback in its continuing work on climate issues.

Review of the policy on energy exchange in transport

In 2012, Landsvirkjun adopted a policy on energy exchange in transport and a transport policy was approved in 2013. Both of these policies outline support for reducing the impact of transport on the environment and atmosphere by reducing the use of fossil fuels and by using energy exchange in transport.

Support for energy exchange has increased within Icelandic society and dialogue on the issue has increased. The policies therefore need to be reviewed and proposals that target these new opportunities need to be developed. Landsvirkjun will continue to endeavour to promote energy exchange in transport, both in its own activities and in cooperative projects.

Status at year-end 2017 A proposal was put forward for Landsvirkjun's Clean Energy Policy, which combines two previous company policies regarding energy exchange in transport and a transport policy, which was subsequently approved by Landsvirkjun's executive committee. One of the projects undertaken in 2017 was the increase of electric car use in the Þjórsá area (instead of the rental of diesel cars), during the summer months, to coincide with the recruitment of summer employees. The experience revealed the following:

Carbon dioxide emissions decreased by 7.9 tonnes CO2 compared to the same period in 2016

3,000 litres of fuel were saved in 2017

The increased use of electric cars in Landsvirkjun's operations is a viable option

Forestation measures in the Skálmholtshraun Lava Field

Skálmholtshraun í Flóa is owned by Landsvirkjun and forestation measures for the area have been under preparation for some time. Land usage has changed in the area and the Master Plan will need to be reviewed for the project to go ahead. The change would imply that the land would be classified as ‘fit for agricultural purposes’. An extensive part of the land is suitable for forestry.

Status at year-end 2017The review of the Master Plan for Flóahreppur has not been completed but most of the land in Skálmholtshraun is already classified as land fit for agricultural purposes. Preparation work for forestation projects was carried out in 2017. Potential partners for the forestation project will be considered and the project is expected to begin in 2018.

Our role is to consistently endeavour to maximise the potential yield and value of the natural resources we have been entrusted with, in a sustainable, responsible and efficient manner. One of the ways to fulfil this role is by paying dividends. Landsvirkjun pays annual dividends to its owner, the Icelandic state. The amount differs between years and is decided by the Board at their Annual General Meeting.

Status at year-end 2017The amount of dividend payments is determined by the Board of Directors at Landsvirkjun's Annual General Meeting. Dividend payments for 2016 amounted to 1.5 billion ISK.

North-eastern Sustainability Initiative

Landsvirkjun launched a Sustainability Initiative (SI) in Northeast Iceland in cooperation with stakeholders in the area affected by the Þeistareykir Geothermal Power Station construction area and the build-up of industry at Bakki. The Húsavík Academic Center (HAC) is responsible for overseeing the project. Sustainability indicators were developed, via a broad consultation process, to assess developments within the area.

Preparation work for the website will take place in 2017. Work on data collection for 2015 and 2016 is expected to be completed by the end of the year and the data will be published on the project's website.

Status at year-end 2017Preparation work for the project's website began in February and the steering committee suggested that the domain www.gaumur.is be used for the project. Data collection and data processing continued alongside preparation work for the website. Initially, the scope of the data collection only covered the years 2015 and 2016, but data will now be retrieved as far back as 2011 or as far as possible without additional cost. See further discussion in the Annual Report.

Dialogue and consultation

Extensive work was initiated within Landsvirkjun in 2015, aimed at improving relations with stakeholders and to encourage consensus on important aspects of projects and Company activities. This will continue in 2017 when interdisciplinary consultative groups will be established within the Company and further efforts will be made to promote dialogue and consultation with stakeholders in various ways.

Status at year-end 2017Nine consultative groups were identified within Landsvirkjun at the beginning of the year and each group received one focus project. The issues were diverse, including the protection of mid-highland areas, climate change and the future energy needs of the community. The work involved dialogue and consultation with stakeholders connected to these issues. An example of this is the future energy needs of the community group who consulted with professional development companies, municipalities and customers when the future energy needs of the community were assessed.

Landsvirkjun's policy is to ensure full gender equality. The Company has established a gender equality policy and a gender equality committee. A gender equality action plan with defined objectives is developed every two years.

Status at year-end 2017 Landsvirkjun achieved its goal and the proportion of female managers exceeded 30% this year.

Appraisal of accessibility

Landsvirkjun's management is aware of the need to increase diversity in its workforce. One of the objectives of 2017 is to assess the accessibility of disabled individuals and to assess the workplace in a broader context at the Company headquarters at Háaleitisbraut 68.

Status at year-end 2017An assessment was conducted in all Landsvirkjun's operational areas in 2017 with regard to gender equality/accessibility, but no such assessment was carried out with regard to the accessibility of disabled individuals at Háaleitisbraut 68.

Accidents

Landsvirkjun’s Health and Safety Policy outlines the fact that the Company is committed to following a zero accident policy in all its projects. This applies to the Company’s own employees and any contractors working for the Company.

Status at year-end 2017There were no absence related incidents this year.

Contributions to the Energy Research fund were increased by 3.5%Landsvirkjun wants to promote public awareness on the impact of climate change and Iceland's responsibility in a global context. This will be achieved through various types of knowledge dissemination, such as open meetings, published content, dialogue and encouragement of informed discussion on climate change.

Status at year-end 2017Landsvirkjun hosted an open meeting in March to outline the Company’s approach to the United Nations Sustainable Development Goals. Landsvirkjun is committed to Global Goal 5 on Gender Equality, Goal 13 on Climate Action and Goal 7 on Affordable and Clean Energy. The company's CEO also participated in a debate on climate issues held by the Association of Chartered Engineers in Iceland (VFÍ) and at a seminar held by Samorka in the spring. Landsvirkjun organised a seminar entitled "Adapting Power Production to a Changing Climate" at the Arctic Circle Assembly conference, held in Harpa on the 13th to 15th of October.

Landsvirkjun's Autumn Meeting, held on the 2nd of November, was well attended and the topic under discussion was the value of renewable energy. The speakers discussed the impact of climate change on energy production and the utilisation of the Icelandic system. They also explained how renewable energy has become more sought after worldwide and how it can be used responsibly and sustainably.

Energy research presented to the public (ORKA)

Work will be initiated on educational material related to energy matters in order to present energy research to the public and to address the sustainable use of energy resources. The focus will be on innovation and technology as well as diversity within the energy sector. The project is a cooperative venture between Landsvirkjun’s Energy Research Fund and the NaNo Project at the School of Education at the University of Iceland.

An emphasis will be placed on literacy, creativity and sustainability. The topics are mostly related to sustainability and will be easily accessible to students as well as the public, on the NaNO website, free of charge.

Status at year-end 2017 The NaNo database is set up by the School of Education at the University of Iceland but the project bank is for teachers in primary and secondary schools who teach the natural sciences. The content of the database is supplied by employed teachers (for employed teachers) and is completely free. A grant was applied for (via the Energy Research Fund) to fund the development of educational materials on energy issues and to promote energy research for the public. The project could not begin this year due to the changing circumstances of the project's members but it is expected to begin in 2018.